How do cost-per-click (CPC) ads compete with cost-per-thousand impressions (CPM) ads on the Google Display Network?

  • CPC bids are effectively converted to CPM bids
  • CPM bids are effectively converted to CPC bids
  • Ads using CPC bids are not allowed to compete on the Display Network
  • CPC and CPM bids only compete against bids of the same type

Correct answer is:

  • CPC bids are effectively converted to CPM bids

Explanation: To keep things fair, when CPC and vCPM ads compete for the same Display Network placement, the two types of ads are compared apples-to-apples on how much they’re effectively willing to pay for the impression. With a vCPM ad, the max viewable CPM bid represents how much the advertiser is willing to pay for each 1,000 viewable impressions; with a CPC ad, Google estimates how many clicks the ad might receive in 1,000 impressions to get the comparison.

Read more here: https://support.google.com/adwords/answer/2630842?hl=en

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